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Foreclosure figures bear no resemblance to those of the 2008 crash.

Monday, April 29, 2024   /   by Bianca Romero

Foreclosure figures bear no resemblance to those of the 2008 crash.

If you've been following recent news, you've likely encountered articles suggesting an increase in foreclosures within today's housing market. This may evoke concerns, particularly if you experienced the housing crash of 2008. However, while there is indeed an uptick, the data indicates that we are not heading towards a foreclosure crisis.

Let's delve into the latest information and compare it with historical data to provide clarity and alleviate any apprehensions.

The Media's Portrayal May Be Misleading

Reports emphasizing the rise in foreclosures might seem alarming. However, it's essential to grasp the context behind these numbers. The comparison often contrasts current figures with a time when foreclosures were exceptionally low due to interventions like moratoriums and forbearance programs.

During 2020 and 2021, initiatives such as moratoriums and forbearance programs provided critical support to millions of homeowners, keeping foreclosure rates artificially low. With the expiration of these measures, it's natural to see foreclosure numbers rise. However, this increase is expected, not surprising, and certainly not cause for alarm. Elevated foreclosure filings do not necessarily indicate a distressed housing market.

To provide a broader perspective, let's extend our comparison to the housing crash in 2008—the event many fear might repeat.

Examining Historical Trends

Analysis from ATTOM, a property data provider, reveals a significant contrast between today's foreclosure activity and that of the post-2008 period. Notably, recent data indicates foreclosure activity has been consistently lower since the crash in 2008.

A recent article from Bankrate highlights one of the key differences between then and now:

"In the years after the housing crash, millions of foreclosures flooded the housing market, depressing prices. That’s not the case now. Most homeowners have a comfortable equity cushion in their homes."

Indeed, foreclosure activity today is vastly different from that during the crash. The majority of homeowners currently have sufficient equity to prevent foreclosure—an encouraging sign for homeowners and market stability alike.

In essence, the data paints a reassuring picture, indicating that a foreclosure crisis is not looming over the current market.

In Conclusion

Contextualizing the data surrounding foreclosure trends is crucial at this juncture. While the housing market is witnessing an anticipated increase in foreclosures, it is far from the crisis levels witnessed during the housing bubble burst. Therefore, this trend is unlikely to precipitate a collapse in home prices.

Bankrate and ATTOM provide further insights into this matter.